Verizon could take on Facebook and Google in online advertising — but it is not there yet

Verizon CEO Lowell McAdamREUTERS/Brendan McDermid
When Verizon Communications acquired AOL for $4.4 billion — a big selling point in the purchase was combining AOLs audience and ad technology with Verizon's rich consumer data. Two years after that deal closed, people in the advertising industry say that promise has yet to be realized. Now, Verizon's purchase of Yahoo — s et to close on June 13— will add another layer to the complexity. If Verizon can get it right, it could become a "third giant" in the online advertising industry, and for some a welcome competitor to Facebook and Google, the dreaded duopoly which is sucking up nearly all of the revenue growth in online advertising.And meshing Verizon and AOL together in a way that their strengths can be exploited for targeted advertising was never going to be easy. Just putting together the companies' ad tech pieces is a brutal undertaking, given that Yahoo and AOL have amassed a mix of acquired technology and custom built software and tools, as Digiday's Yuyu Chen reported in April. But for now, progress is slow. "They have made some marginal progress but are nowhere near integrating the disparate data sets or unlocking the vision of integrating their content and people inside Oath," one ad buyer said, referring to the name Verizon plans to use for all of its media assets once Yahoo is part of the picture.

Advertisers say that Verizon is heading in the right direction. But one agency executive noted that the telecom giant has been irking some marketers by pushing its own ad tech tools on advertisers if they want to unlock Verizon's data for targeting.

AOL executives did not respond to multiple requests for comment for this story. Verizon does not break out AOL's performance in its earnings.

The good news for Verizon-the company has a lot of goodwill in the ad business, and people are rooting for it, or any company out there, to create a third contender to challenge the digital ad duopoly.

Shreya Kushari, who oversees media, search and paid social for the ad agency DigitasLBI, is bullish and willing to be patient.

"I see another third giant coming," she said. "While Google and Facebook are a bit of a black box, the data that [Verizon has] is real accurate verified. It's extremely rich."

Kushari said that Verizon has been rolling out some beta tests designed to demonstrate the power of Verizon's data for advertising. "They are taking a wait and watch approach," she added. "It's a rough cut diamond right now. They need to really consolidate and pull it all together so they don't lose momentum. But I think there won't be a duopoly by 2018."